How to use the calculator
- Enter an amount: the price of something you buy today, a monthly budget, or a sum of savings.
- Enter the number of years and the inflation rate you expect.
- Open Compare with your savings and pay to check whether the interest on your savings and your yearly raises keep up with inflation.
How inflation is calculated
Inflation compounds like interest, but against you. The calculator uses two formulas:
future cost = amount × (1 + inflation)^years
purchasing power = amount / (1 + inflation)^yearsThe first answers “what will this cost later?”, the second “what will my money buy later, in today’s prices?”. To compare a return with inflation, the calculator uses the exact real return, (1 + return) / (1 + inflation) − 1, rather than simply subtracting one rate from the other.
Example: $1,000 at 3% inflation for 20 years
| Question | Answer |
|---|---|
| What costs $1,000 today will cost | $1,806 |
| $1,000 kept in cash will buy what costs today | $554 |
| Purchasing power lost | 44.6% |
| Prices double every | 23.4 years |
Even the 2% inflation target that many central banks aim for, including the US Federal Reserve, doubles prices in about 35 years, which is roughly the length of a working life.
Who inflation hurts and helps
- Hurts: cash and low-interest savings, fixed pensions and annuities without a cost-of-living adjustment, and fixed-rate bonds held to maturity.
- Helps: people with fixed-rate debt such as a mortgage, because they repay it with money that buys less.
- Usually keeps up over long periods: stocks, real estate and inflation-protected bonds such as US TIPS, though none of them does so every year.
Common mistakes
- Using the headline rate for everything. Your own inflation depends on what you buy. Housing, healthcare and education have often risen faster than the overall index.
- Ignoring it in long-term plans. A savings goal set in today’s money needs to grow with inflation. The millionaire calculator shows what a future million is worth today.
- Subtracting rates. 8% return with 3% inflation is a real return of 4.85%, not 5%. The gap grows with higher rates.
Frequently asked questions
How do I calculate the future cost of something with inflation?
Multiply today's price by (1 + inflation rate) raised to the number of years. At 3% a year, $1,000 today becomes $1,000 × 1.03^20 ≈ $1,806 in 20 years.
What is purchasing power?
What a sum of money can buy. With inflation, the same number of dollars buys less each year. At 3% inflation, $1,000 kept in cash for 20 years buys what about $554 buys today.
What inflation rate should I use?
Many central banks, including the US Federal Reserve, aim for about 2% a year, but actual inflation has often been higher or lower for years at a time. Try a few rates; the table under the chart shows the result at 2% to 8%.
What is a real return?
Your return after inflation: (1 + return) ÷ (1 + inflation) − 1. A savings account paying 4% when inflation is 3% has a real return of about 0.97% a year.
How long does it take for prices to double?
Divide 72 by the inflation rate for a quick estimate (the Rule of 72). At 3% prices double in about 24 years; at 2% in about 35 years.
Is my pay raise keeping up with inflation?
Only if it is larger than inflation. A 3% raise when prices rise 4% is a real pay cut of about 1%. Enter your raise under "Compare with your savings and pay" to see the real change.
Can I put this calculator on my website?
Yes. It is free for any site. Use the embed code generator at the bottom of this page, copy the code and paste it into your page. Please keep the credit line with the two links under the calculator.
Related calculators
- Historical Inflation CalculatorWhat an amount from any year or month since 1913 is worth in another, from official US CPI data.
- Salary Inflation CalculatorWhether your pay kept up with prices: an old salary in today’s money and your real raise.
- Fed Funds Rate HistoryThe federal funds rate since 1954, today’s target range and every Fed hike and cut since 1982.
- Rule of 72 CalculatorHow long money takes to double, triple or quadruple, with the exact figure alongside.
See all free investing calculators, or add live stock quotes to your site with the free stock widgets.
Add this calculator to your website
The calculator is free to embed on any website, personal or commercial, and works on WordPress, Blogger, Wix, Squarespace, Webflow, Ghost and plain HTML. Choose the options, copy the code and paste it into your page.
Preview: this is how the calculator and the credit line will look on your page
Free for personal and commercial websites. Please keep the “by Quotelinks” credit line under the calculator visible and unchanged, and don’t modify the calculator or present it as your own. The <script> line is optional: it sizes the frame to fit the calculator; if your platform removes scripts, the calculator still works at the fixed height. Results assume one steady inflation rate. Real inflation changes from year to year and differs by what you buy. For illustration only, not financial advice.